Case of the Day: Plata v. Darbun Enterprises

The case of the day is Plata v. Darbun Enterprises, Inc. (Cal. Ct. App. 2014). Plata was an employee of Soluciones Tecnologicas de Mexico, S.A. de C.V., a Mexican firm. He brought a claim before the Number One Special Local Labor Relations and Conciliation and Arbitrage Local Authority of the City of Tijuana, claiming that his wages had not been paid. Darbun Enterprises, a California firm, was a defendant, because it was “part of a production unit responsible for paying wages to Soluciones employees.” Darbun had notice of the action and appeared and defended. The Board entered a judgment in Plata’s favor, and it awarded damages, including 20 days salary for each year worked, three months’ salary, vacation pay for past years, a vacation pay bonus, a seniority bonus, payment equal to 30 days of Plata’s last salary, and payment of all unpaid salaries from the date of the action until the judgment was satisfied. This last item seems unusual: according to Plata, under Mexican law “an employee is not deemed to have been effectively terminated until the employee has been paid all back wages, sick pay and vacation pay.”

Darbun challenged the validity of the Board’s judgment in the Mexican courts on statute of limitations grounds and on grounds of a supposed conspiracy between Plata and the Board. But the courts rejected the challenge, and the judgment had become final.

Plata brought an action for recognition and enforcement in the US District Court for the Southern District of California, but the action was dismissed on technical grounds. Plata then brought an action in the California Superior Court. The question was whether the Mexican judgment imposed a penalty: California’s Foreign-Country Judgment Act, modeled on the UFCMJRA, does not apply to a judgment “to the extent that the judgment is … a fine or other penalty.” (The California provision is identical to UFCMJRA § 3(b)(2)). A related question was whether any part of the judgment could be recognized if part of the relief it awarded was compensatory and part was penal.

The Superior Court dismissed the action with prejudice, and Plata appealed. On appeal, the court reversed. It held, first, that the statute’s use of the words “to the extent” indicated that a judgment could be recognized in part, i.e., that recognition and enforcement is not an all-or-nothing proposition. This is consistent with the drafters’ intent, as reflected in the official comment:

This Act applies to a foreign-country judgment only to the extent the foreign-country judgment grants or denies recovery of a sum of money. If a foreign-country judgment both grants or denies recovery of a sum money and provides for some other form of relief, this Act would apply to the portion of the judgment that grants or denies monetary relief, but not to the portion that provides for some other form of relief. The U.S. court, however, would be left free to decide to recognize and enforce the non-monetary portion of the judgment under principles of comity or other applicable law.

Second, the court held that the part of the judgment that awarded wages from the date of the action until the judgment was satisfied was a penalty. The term “penalty”, in its international sense, means an award whose “purpose is to punish an offense against the public justice of the State” rather than to “afford a private remedy” to the plaintiff. (Here the court relied on Huntington v. Attrill, 146 U.S. 657 (1892)). The court took this as obvious: I’m not so sure given what the plaintiffs say about Mexican law on the termination of employment. But I’m not disagreeing with the court here. The other parts of the judgment, though, were not penal and ought to have been recognized.

I do think that the court or the parties missed a point—even if the penal portion of the judgment could not be enforced under the statute, perhaps it could be enforced as a matter of comity. I don’t know whether California law permits the recognition of judgments outside the statute, but as a general matter under American law, traditional principles of comity permit recognition of foreign judgments even if the UFCMJRA doesn’t apply to the judgment.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2012), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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